First State CPAs and Associates

2 days ago

𝗪𝗵𝗮𝘁 𝘁𝗮𝘅 𝗱𝗼 𝗜 𝗽𝗮𝘆 𝘄𝗵𝗲𝗻 𝗜 𝘀𝗲𝗹𝗹 𝗺𝘆 𝗯𝘂𝘀𝗶𝗻𝗲𝘀𝘀?

What you’ll owe in taxes depends on how the sale is structured and exactly what the buyer is purchasing.

If you sell ownership shares or goodwill, some of the proceeds may be taxed at long-term capital gains rates.

But money tied to inventory, accounts receivable, or depreciation recapture can be taxed as ordinary income instead. And if you own a C corp, an asset sale can trigger tax at both the corporate and personal level.

So if you’re discussing a sale, don’t just ask, “What’s the offer?”

Find out whether the buyer is proposing an asset sale or stock sale, and how much of the purchase price will be assigned to things like goodwill, equipment, inventory, and receivables.

If you’re still 12 to 36 months away from selling, that’s also the time to review your entity structure. Once you’ve signed a letter of intent, your tax options can become much more limited. ... See MoreSee Less

First State CPAs and Associates

4 days ago

𝗖𝗮𝗻 𝗜 𝗳𝗶𝗹𝗲 𝗮𝗻𝗼𝘁𝗵𝗲𝗿 𝘁𝗮𝘅 𝗲𝘅𝘁𝗲𝗻𝘀𝗶𝗼𝗻 𝗮𝗳𝘁𝗲𝗿 𝗢𝗰𝘁𝗼𝗯𝗲𝗿 𝟭𝟱?

No, if you filed an extension in April, October 15 is your federal filing deadline. There isn’t a second standard extension you can file to buy yourself more time.

There are limited exceptions for certain taxpayers living and working abroad, military members serving in designated combat zones, and people affected by federally declared disasters.

Otherwise, if October 15 is getting close and you’re still missing documents, start tracking them down now.

Can’t find a W-2 or 1099? Your IRS Online Account may have a Wage and Income Transcript showing information that’s already been reported to the IRS.

And if you have most of your documents ready, don’t wait for the last missing item before contacting your tax pro. Send us what you have so we can start reviewing your return and identify what’s still needed. ... See MoreSee Less

First State CPAs and Associates

5 days ago

𝗪𝗵𝗮𝘁 𝘀𝗵𝗼𝘂𝗹𝗱 𝗜 𝗰𝗵𝗲𝗰𝗸 𝗯𝗲𝗳𝗼𝗿𝗲 𝗜 𝘀𝗶𝗴𝗻 𝗮 𝗰𝗼𝗻𝘁𝗿𝗮𝗰𝘁 𝗳𝗼𝗿 𝗺𝘆 𝗯𝘂𝘀𝗶𝗻𝗲𝘀𝘀?

Before you sign, check exactly what you’re agreeing to pay, how long the agreement lasts, and what each side is responsible for.

Then check the smaller details:

• Whether it renews automatically
• What it takes to cancel
• Any additional fees or charges
• When payments are due
• Any requirements you’ll need to meet during the agreement

𝙋𝙧𝙖𝙘𝙩𝙞𝙘𝙖𝙡 𝙩𝙞𝙥: Write down any part you don’t understand as you read. Then get those questions answered before you sign, instead of assuming you’ll figure them out later. A few extra minutes of reading can give you a much clearer picture of what your business is committing to. ... See MoreSee Less

First State CPAs and Associates

1 week ago

𝗛𝗼𝘄 𝗱𝗼 𝗜 𝘀𝗲𝘁 𝘂𝗽 𝗮𝗻 𝗔𝗰𝗰𝗼𝘂𝗻𝘁𝗮𝗯𝗹𝗲 𝗣𝗹𝗮𝗻 𝗳𝗼𝗿 𝗺𝘆 𝗦 𝗰𝗼𝗿𝗽?

To set up an Accountable Plan for your S corp, start with these four steps:
1. Adopt a formal written plan that spells out eligible expenses, deadlines, and documentation requirements.
2. Create a monthly expense reporting system that records the amount, date, business connection, receipt, and business-use percentage for mixed expenses.
3. Submit your expense reports and receipts within the IRS 60-day safe harbor window, then formally approve them.
4. Transfer the approved reimbursement from your S corp account to your personal account and record it under the appropriate operating expense.

Want help putting an Accountable Plan and monthly expense process in place? Send us a DM. ... See MoreSee Less